You have many financial concerns at different phases of your life, but you don't want to put off retirement planning. It's a good idea to start as early as you can so your money has more time to grow. The earlier you start, the less you have to contribute to reach your retirement goals. If you wait until later in life, you'll have to catch up and invest more from each paycheck. However, a retirement advisor can help you plan your retirement by helping you determine a good amount to invest based on your current lifestyle and income. Here are three important steps in retirement planning.
Planning Your Income
Retirement planning involves determining the income you'll need when you retire. This may be somewhat difficult to predict if your retirement is decades away, so a retirement planner can help. Having a set income goal in mind is the basis for your investment and savings decisions. You need to know how much money you want to make when you retire and where it will come from so you can have the money in place when you need it. The amount of money to set as a goal depends on your lifestyle. If you plan to travel the world when you retire, you'll probably want a higher goal than if you just want to stay around home and work on hobbies or volunteer your time with charities. Let your planner know what you love to do and want to do so they can help you create the income you'll need.
Choosing Your Investments
Investing is a good way to grow your money, and it's an important step in retirement planning, but choosing the right type of investment is important. You'll probably want the help of a retirement planner or financial advisor so you make good choices. You'll still have the freedom to make some investments yourself, and if you start retirement planning early, you can afford to make riskier investments that could bring a high return. When you're closer to retirement age, you will probably want to play it safe so you don't lose money. You'll want a retirement account through your employer, and if you're self-employed, your planner can help you choose the right account for your circumstances.
Planning Distribution Taxes
When you're ready to retire and start withdrawing money from your investments and retirement savings, you'll have to pay taxes. You'll probably need help from a professional to make sure you manage your money well at this point and don't lose money to unnecessary taxes. Planning taxes may also affect how you invest your money as you approach retirement. Whether you have a small estate or a large one, taxes will affect you once you retire, and it's good to know what to expect in advance.
For more information on retirement planning, contact a professional near you.
